The deal will result in an organisation with nine million customers, 300 branches, 12,000 staff and assets worth £70billion, making it the country’s second-biggest mutual after Nationwide. It will be a subsidiary of the Co-op Group.

He said there had been no political pressure brought to bear from a Government desperate for strong financial institutions able to lend.

Richardson said the new group would be much stronger because it brought Britannia’s big mortgage business together with Co-op Financial Services current accounts, savings and internet businesses.

The tie-up is expected to be the first among a number between customer-owned organisations following the passing of new laws to let different types of mutuals merge with each other.

It will result in savings and cost benefits worth £60million a year but Richardson was confident there would be no compulsory redundancies. Jobs will be lost through “natural turnover”.

Mutuals have weathered the credit crunch better than the banks because they are run much more conservatively than banks.

However, Britannia owned up to unspecified losses on two failed banks last year, and warned it would be hit by new rules to protect depositors.